Telecom firms begin journey to roll out joint 4G network
Posted Wednesday, July 25 2012 at 18:19
The efforts to roll out a joint fourth generation (4G) infrastructure has been stepped up with the commencement of the formation a consortium that will own and finance the project.
Last Friday, nine firms — Safaricom, Airtel, Telkom Kenya’s Orange, Essar’s Yu, Kenya Data Network, MTN, Alcatel Lucent, Nokia Siemens and Epesi — which have expressed interest in the 4G ownership, formed three committees that will come up with the financing model and regulations to govern the consortium.
The ownership structure is a Private Public Partnership, where the government and the operators will own stakes in the network equivalent to the capital they inject.
Information Permanent Secretary Bitange Ndemo said the three committees —legal, tax and finance — are supposed to come up with rules that will govern the operations of the consortium and the modality on how each member will contribute their equity.
“We had first to come with the policy that will guide the members and also agree on sensitive matters such as modality of financing and tax obligations before the formation of a consortium,” Dr Ndemo told the Business Daily in a phone interview.
“The government on its part will offer the lower spectrum frequencies,” he added.
“This is intended to reduce the capital expenditure to the private operators as opposed to where we (the government) auction the frequencies.”
He added that the government is keen on this model as it will result in fast and affordable Internet prices at a time when the State is looking to link schools, hospitals and county governments to the central government.
The national rollout cost of the 4G network is estimated at Sh70 billion, to be shared by the nine firms .
The 4G (or LTE network) is a wireless technology with a larger capacity to deliver data and facilitate high-end services such as video conferencing and gaming.
Mobile carriers worldwide are upgrading to LTE networks that support high-speed wireless services as consumers use tablet computers and smart phones to surf the web.
The ownership of the consortium will be on an open access model where the operators who have not invested in the 4G rollout would lease capacity from the nine firms.